[5] It was founded in 1995 by a trio of formers manager[2] and cofounders at[6] Option One Mortgage, including Brad Morrice, who became chief executive.
[5] On March 2, 2007, it announced it was the subject of two criminal probes[3] by the federal government,[10] and that its auditor KPMG had worries about the company's ability to stay solvent.
[10] On March 12, 2007, the New York Stock Exchange halted trading of New Century Financial Corporation, delisting the company.
On March 13, 2007, New Century Financial Corporation reported in a regulatory filing that it has received a grand jury subpoena from the U.S. Attorney's Office for the Central District of California as well as a letter from the Securities and Exchange Commission notifying the company of a preliminary investigation.
On March 14, 2007, it was reported that Barclays had demanded that New Century immediately pay back $900 million of mortgage loans.
[14] That day it was also blocked from making loans in New Hampshire, on the grounds that it hadn't informed the state of its financial difficulties.
[18] At the time it filed for bankruptcy, it had already fired 3,200 employees, or 54% of its work force, with plans to quickly sell assets in the upcoming month and a half.
The company secured $150 million of financing from CIT Group Inc. and Greenwich Capital so that it could continue to operate during the bankruptcy process.
"[20] On June 8, 2007, New Century Financial warned that its effort to liquidate assets could be stymied if GE Capital was allowed to proceed with plans to seize computers and other equipment it leased to the bankrupt housing lender.
GE Capital, arguing that New Century owes it $8.7 million on leased equipment and can't stay current on payments, asked a judge to lift the protection normally granted to companies in Chapter 11.
New Century also said "it is critical for the debtors to use the equipment" so that the loan-servicing business it recently sold to Carrington Capital Management can be kept "operating as a going concern."
[21] In March 2008, during the liquidation of New Century Financial Corporation, a private company in Northern Illinois acquired only the brand assets in the bankruptcy.
On March 26, 2008, an unsealed report by bankruptcy court examiner Michael J. Missal[22] outlined a number of "significant improper and imprudent practices related to its loan originations, operations, accounting and financial reporting processes," and accused auditor KPMG with helping the company conceal the problems during 2005 and 2006.
[5] On July 31, 2010, the Los Angeles Times reported that settlements had been reached between the SEC, plaintiffs representing a class of investors, and directors and officers of New Century.
On the same day the SEC settlement was announced, New Century, and its directors and officers settled civil class actions claims brought against them and the company.
Black, Donald E. Lange, Terrence P. Sandvik, Richard A. Zona, Marilyn A. Alexander, David Einhorn and William J. Popejoy.
In The Big Short (2015), young investors Charlie Geller and Jamie Shipley have bet heavily on the failure of sub-prime mortgage bonds, but have to endure an excruciating wait while the spike in defaults seems to leave the housing market unaffected.